'Uber for marijuana:' Snoop Dogg's newest business investment

Eaze, a mobile app-based marijuana delivery service, recently raised $10 million from investors, including Snoop Dogg's Casa Verde Capital. What does this say about the emerging marijuana market?

|
Brennan Linsley/AP/File
A marijuana plant matures at a growing facility, in Denver. Colorado lawmakers started work April 9, 2015 on a proposal to allow people on probation or parole to use medical marijuana.

The San Francisco-based startup company Eaze, which provides a marijuana delivery service, recently raised $10 million from various investors including DCM Ventures, 500 Startups, Fresh VC, and Snoop Dogg's Casa Verde Capital.

As one of the first companies of its kind to garner that much investor support, Eaze’s success raises questions about the marijuana industry's emergence at a time when the legal status remains hazy. Under federal law, to grow, sell, or consume marijuana remains illegal. The US Justice Department has chosen not to enforce the law in states where the drug has been legalized. For businesses, that raises questions about marijuana sold across state lines. 

But Eaze is plunging ahead. Based on the instant delivery, community powered premise the Uber car-service made trendy in the startup community, Eaze connects medical marijuana users in California to local dispensaries through a mobile app. Like Uber, it utilizes delivery drivers.

Business opportunities are emerging as restrictions on marijuana are lifted, with many states moving toward allowing medical use and Alaska, Colorado, Oregon, Washington D.C., and Washington State legalizing recreational use. However, investors remain wary about putting their money behind it and Eaze is one of the first weed-centered startups to get significant backing. 

“At the time we invested in the seed, we had a thesis the medical marijuana market would continue to grow, and from a regulatory perspective, it would move toward deregulation,” Kyle Lui, a principal at DCM, told Quartz. “Things accelerated much faster than we had anticipated.”

The market is flooding with so called “ganjapreneurs”  seeking funding from investors. Dixie One is looking to market THC infused candies and drinks, while Privateer Holdings recently secured a 30-year license to sell Jamaican cannabis strains under Bob Marley’s name.

Other companies are looking to cash in less directly. Among the periphery businesses cropping up are consulting companies to advise dispensaries, tourist destinations catering to stoners, manufacturers producing child-resistant plastic baggies, and a whole host of mobile apps, in addition to Eaze.

Emily Paxhia, founding partner at Poseidon Asset Management, says that not only is there ultimately more money to be made in ancillary markets, but the companies will have an easier time finding investors.

“We do a tremendous amount of due diligence, but when it comes to companies that touch the plant, it’s almost eight times that,” Paxhia told Quartz.

Therefore, Eaze has an advantage as it is primarily a technology company and does not grow or sell marijuana. DMC sees investing in marijuana as a forward thinking move, despite the legal ambiguity.

“In a lot of jurisdictions, Uber was breaking the law, Airbnb was breaking the law,” Lui said. “I think being forward-thinking, you have to see where the world is going rather than where you currently are.”

Following its large capital investment, Eaze is going on a hiring spree while looking to expand the business outside of California so as to stay ahead of the competition.

“The plan is to be in every market as quickly as possible that allows for medical marijuana and even recreational use of marijuana,” Keith McCarty, founder of Eaze, told Quartz, singling out Nevada, Arizona, Washington, Colorado, and Oregon.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to 'Uber for marijuana:' Snoop Dogg's newest business investment
Read this article in
https://www.csmonitor.com/Business/2015/0414/Uber-for-marijuana-Snoop-Dogg-s-newest-business-investment
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe